Metro Bank Shares Fall Again Despite ‘Advanced’ Plans to Raise £350m

The lender said it was in “final discussions” over raising new capital but its statement did little to impress investors
Metro Bank has been forced to raise fresh capital after a major accounting error first disclosed in January, which has spooked investors and sent its market value tumbling. Metro Bank’s problems were compounded over the weekend when it was forced to deny “false rumors” circulating on social media - with a WhatsApp message advising people to withdraw money from their accounts and empty their safe deposit boxes. Meanwhile, in an interview, chief executive Craig Donaldson revealed that Metro Bank was considering plans to sell £1bn worth of loans at the center of the accounting blunder that has plunged the bank into crisis. The impact of the mistake was demonstrated by quarterly results showing that Metro Bank’s profits had halved and it had suffered an exodus of corporate customers. Metro Bank has 1.7 million customers and describes itself as “the revolution in British banking”, employing a model founded on friendly customer service. However, its recent travails have dented its hopes of growing its deposit base by 20% this year. Russ Mould, investment director at AJ Bell, said: “While Metro Bank has done its best to reassure customers that their money is safe, pictures of one of its branches packed with individuals wanting to cash out is damaging to its reputation and could hurt new customer growth, at least in the short term. “Assuming it raises £350m later this week, Metro Bank will then have to prove to the market and its customers that the business is robust and capable of growing without needing regular capital injections and also without a repeat of the recent accounting error.”